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-   -   Questions on running a Ltd company as a Spanish resident (https://britishexpats.com/forum/spain-75/questions-running-ltd-company-spanish-resident-909371/)

Rachel456 Sep 14th 2020 2:00 pm

Re: Questions on running a Ltd company as a Spanish resident
 

Originally Posted by Mark Ot (Post 12895651)
Hello,

I've been reading this thread as I am in a similar situation to all the above (UK Ltd but moving to spain).

From what I can gather, it is not possible to draw a salary from the UK company whilst living in Spain as most people seem to assume. To be paid a salary in Spain the UK company MUST register with the Spanish Social Security and pay spanish tax. There is no way around it. Similarly you can not be on PAYE in the UK if you are not living in the UK. This is very basic stuff, so I'm a bit surprised by the amount of people that think/have been adviced it's possible to pay yourself a salary whilst in Spain from your UK Ltd.

Other than that, like all the others I'm also scratching my head as to how to go about it all. It's an absolute minefield. The advice that the Ltd company could be deemed to be Spanish unless it has a director and business place in the UK is also correct.

Has anyone has had problems or been investigated by the Spanish authorities in relation to all of this?

Mark, have you found any resolution to this? I am in the same boat.

Rachel456 Sep 14th 2020 2:09 pm

Re: Questions on running a Ltd company as a Spanish resident
 

Originally Posted by melocoton (Post 12895716)
It is indeed a minefield.

I spoke to HMRC twice last week (regarding self-assessment and NI), and they advised me both times that unless I am self-employed in Spain and submitting invoices to the UK company, then I must be on the payroll of the UK company. Regardless of whether I am non-resident and living in Spain. UK Tax and NI are paid on all UK earnings under self-assessment, and a double taxation 'certificate' is required so it can be used when the annual declaration is made in Spain.

Although you cannot invoice your company as an Autonomo. As per my UK tax accountant: The work is performed by the UK company. The company invoices the client, gets paid by the client, then pays you as the director as a salary. So I cannot see how you are self-employed/contractor in Spain, submitting invoices to the company. You are an employee of a UK company who performs their duties in Spain. :( Have you found a resolution yet?

EuroTrash Sep 15th 2020 7:45 am

Re: Questions on running a Ltd company as a Spanish resident
 
This thread seems to be going round in circles.
Surely the answer is simple enough - just do the necessary registrations in Spain. If you live and work in Spain your company must register you as a Spanish employee for starters, then your social security contributions get paid in Spain and you pay your personal income tax in Spain.
Whether the company itself can remain solely UK based or whether you need to set up a Spanish entity, either instead or in addition, would depend on how the UK-Spain tax convention applies to your specific circumstances. It will hinge on your business model, how the UK company is owned and established, etc.
I don't understand the reluctance to do this in Spain. In France I do understand because being an employer in France is not for the faint hearted, French social contributions are around double what you pay in the UK, and the system is quite onerous and complicated, sobunderstandably it can be a deal breaker for UK business owners considering a move to France. But AFAIK Spanish employment law and social security rates aren't that much more onerous than in the UK and yet folk seem to be circling round and round the question trying to find a way to avoid dipping their toe in the water. If you have decided to move countries, you have to be prepared to jump in with both feet. Moving to a country and at the same time trying to find ways to avoid its laws and its administration processes, ain't gonna work. If a country's laws don't suit you, don't go live there, simples.


Originally Posted by melocoton (Post 12895716)
Regardless of whether I am non-resident and living in Spain. UK Tax and NI are paid on all UK earnings under self-assessment, and a double taxation 'certificate' is required so it can be used when the annual declaration is made in Spain.

I think there's been some confusion here.
If you're permanently living and working in Spain, your salary is not taxable in the UK and you don't pay NICs. If you neither live nor work in the UK, and you're not covered by an S1 or some description, you are not eligibile for NHS cover or UK social security benefits. If you live and work in Spain, you must pay into the Spanish social security system and you must pay your income tax in Spain.
https://www.gov.uk/tax-foreign-income
If you’re not UK resident, you will not have to pay UK tax on your foreign income.
Of course with HMRC nothing is ever simple and they may class you as tax resident even when you actually live in another country, so again, it will depend on your personal circumstances (how many days you spend in the UK etc). But if you are officially resident in Spain as far as the Spanish authorities are concerned, you would in any case have to pay tax in Spain initially. If the UK wants to class you as dual resident, the dual tax treaty will be applied and normally you won't pay any additional tax in the UK on income already taxed in Spain. You just have the hassle of filling in the forms every year and sorting out any cockups that HMRC make. Unfortunately, keeping a foot in both camps is likely to become a real pain after Brexit.



ElMaximo Apr 21st 2021 12:42 pm

Re: Questions on running a Ltd company as a Spanish resident
 

Originally Posted by Mark Ot (Post 12895651)
Hello,

I've been reading this thread as I am in a similar situation to all the above (UK Ltd but moving to spain).

From what I can gather, it is not possible to draw a salary from the UK company whilst living in Spain as most people seem to assume. To be paid a salary in Spain the UK company MUST register with the Spanish Social Security and pay spanish tax. There is no way around it. Similarly you can not be on PAYE in the UK if you are not living in the UK. This is very basic stuff, so I'm a bit surprised by the amount of people that think/have been adviced it's possible to pay yourself a salary whilst in Spain from your UK Ltd.

Other than that, like all the others I'm also scratching my head as to how to go about it all. It's an absolute minefield. The advice that the Ltd company could be deemed to be Spanish unless it has a director and business place in the UK is also correct.

Has anyone has had problems or been investigated by the Spanish authorities in relation to all of this?


This page seems to have useful info - I'm understanding it depends where the business activity is being conducted (sorry I'm too new to post the link!):

Working for a UK company in Spain?

You pay Social Security

"Workers contracted by a foreign business with the aim of carrying on their activity in Spain will be subject to Spanish legislation regarding the Social Security contributions before they are contracted to work."

According to the Seguridad Social - Reglamentos Comunitarios which is the system under which workers working for a foreign company in Spain fall under: Workers contracted by foreign businesses to work in Spain.
"Workers contracted by a foreign business with the aim of carrying on their activity in Spain will be subject to Spanish legislation regarding the Social Security contributions before they are contracted to work. These workers are not considered displaced workers under the social security act, and are subject to the legislation of the country in which they carry out their activity.
The foreign business must apply to the corresponding Tesoreria General or Administration for a social security contribution account number to register the business with the Spanish social security and hence subsequently register the worker with the Spanish social security."
There are really 2 issues:
  1. As an employed person you want to be covered by the social security system of the country in which you are carrying out your activity.
  2. To be covered comprehensively in the country in which you carry out your activity you need to contribute to that countries social security system.
In order to be able to contribute there has to be a mechanism for you to be able to contribute and for your employer to be able to pay their share of employers contribution into the social security system of the country in which you are working. This is the same for any EU country.
The way that employees social security contributions are collected in the UK are through the employer. Employees in the UK do not personally pay their social security contributions instead they are deducted at source by the employer who in turns pays into the UK social security system.
It's no different in Spain, regardless of whether you work for a Spanish or foreign employer in Spain, social security contributions are deducted at source and then paid by the employer to the Spanish social security system. In the UK employers have an employers reference number to which employees currently working for that employer are registered to. The same in Spain each employer has a number to which employees are registered to and deductions are made and contributed under that number.
The social security make no charge for a foreign business to register as an employer or to register their employees with the social security. We have registered several foreign employers with the Spanish social security and tax system, and process their tax and social security obligations without any problems whatsoever.
So there is no need to worry about working illegally or not being able to contribute in the country in which you are working, your employer just needs to register as an employer and subsequently register you as an employee.

By Spain Gestor

rspltd Apr 22nd 2021 6:27 am

Re: Questions on running a Ltd company as a Spanish resident
 
As with most things, I suspect the devil is in the detail. The article was doing fine until the last paragraph- ‘ your employer just needs to register as an employer and subsequently register you as an employee.‘ - I suspect this is the stumbling block! These few words have enormous complications for companies both bureaucratic and financial and there is usually a considerable reluctance on their behalf to go down this route for potentially one person.


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